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16 Strategic Planning in the Airport Industry Helping to build consensus on core business issues before proceeding with the master plan- ning process The main economic benefit of strategic planning cited by the focus groups was that it allows airport management to shape its strategic response to structural changes in the business envi- ronment (e.g., change in traffic mix from general aviation to corporate) to maintain financial stability A common benefit of the strategic planning process in both airport and corporate settings is that the process is useful for establishing metrics to measure performance. Another common benefit is the usefulness of the process for communicating the mission and vision of the orga- nization to employees. Participants in the three airport focus groups formed by the research team consistently men- tioned the benefits of using the strategic planning process as a tool for reconciling the compet- ing demands of policymakers, the community, and airport tenants and users.6 The usefulness of the strategic planning process for building community support and explaining to elected offi- cials how the airport contributes to the community's economic development, for instance, was mentioned by participants in more than one focus group. During the focus group discussions, airport executives also stressed the importance of strate- gic planning as a motivational tool to help employees at all operating levels and in all depart- ments to understand the vision for the organization. They also indicated that the airport strategic planning process is oriented toward empowering stakeholders and addressing their needs. The academic literature on corporate strategic planning highlights the usefulness of the strate- gic planning process in enabling corporations to develop strategies for building a competitive advantage that leads to sustained growth in profits. The public utility nature of airports makes airport management less likely to focus on the economic benefits of the strategic planning process. Airport management has limited control over its customer base, and the emphasis for airport organizations is on financial stability (i.e., revenues offsetting costs and a lower rate struc- ture), not profitability. 2.4 The Airport Planning Processes The differences and similarities between airport strategic planning and other forms of airport planning are discussed in this section. An overview of the correlations between these airport planning processes and how their combination provides an essential, if not required, tool for air- port management and planning is also provided. As illustrated in Exhibit 2-7, the airport strategic plan should guide all other airport planning analyses (input from the focus group participants also supported this view). The airport strate- gic plan sets forth the foundation for planning initiatives and defines the road map that the organization should follow to achieve its vision. All other planning analyses should be aligned with and support the strategic plan. Strategic planning differs from long-term planning. In long-term planning, it is generally assumed that the environment in which the organization operates will remain unchanged over time or that trends and patterns from the past will continue in the future. Goals and objectives defined as part of the long-term planning process are based on an extrapolation of current busi- ness trends. Strategic planning, on the other hand, enables an organization to react to a dynamic 6 These benefits were echoed by respondents to the online survey.

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What Is Strategic Planning? 17 RISK IDENTIFICATION OPPORTUNITIES AIRPORT STRATEGIC PLAN RISK MANAGEMENT MARKETING BUSINESS MASTER LAND USE PLAN PLAN PLAN PLAN PLAN INSURANCE AIR SERVICE CONTRACTS FACILITIES ACQUISITIONS RESOURCE AND STAFFING PLAN Business/Finance Planning and Development Administration TRAINING AND DEVELOPMENT PLAN Exhibit 2-7. Interrelationship of airport planning processes. and continually changing environment. Strategic planning is about proactively thinking about and mapping the future and developing a creative plan that will enable the organization to reach its objectives in a non-static environment. A review of the external environment to determine whether emerging issues may pose threats or opportunities to the organization is a key compo- nent of strategic planning. Often, many other airport planning analyses are developed prior to development of a strate- gic plan and provide critical inputs to the airport strategic planning process. However, once an airport strategic plan is developed, these planning analyses must be adjusted to align with the strategic plan objectives. The airport business plan and strategic plan are closely related and may even be prepared simul- taneously. An airport strategic plan sets the direction for the airport in the medium- to long-term future, defines generic and grand strategies and long- and short-term objectives, and defines the specific steps necessary for implementing those strategies and objectives. The business plan iden- tifies the short- to medium-term steps that must be implemented to move the organization toward realizing its vision. The business plan should be the department-level action plan that guides the day-to-day implementation of the strategic plan's specific objectives (i.e., the action plan section of the strategic plan should be consistent with, and integrated into, the department-level business plan). Results of the online survey indicated that there may be a lack of clarity about the relation- ship between an airport's business and strategic plans. Results of the online survey indicated that

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18 Strategic Planning in the Airport Industry there may be a lack of clarity about the relationship between an airport's business and strategic plans, as 44 percent of respondents to the online survey stated that they consider their business and strategic plans to be the same. Airport marketing plans should also reflect the goals set during the strategic planning process. For example, if the goal of the strategic plan for a non-hub airport is to attract a total of 500,000 passengers by 2012, the marketing plan should detail the air service development strategies that will lead to accomplishment of that goal. The master planning process typically defines the airport facilities needed and when they will be needed. Master planning is primarily focused on facilities, while strategic planning has a much broader scope. The master plan relies on the strategic planning process for definition of the air- port's vision, its customer base (e.g., business aircraft operators vs. general aviation pilots flying for leisure), and services to be provided (e.g., general aviation vs. cargo). On the basis of that infor- mation, the master planning process leads to review and evaluation of several development alter- natives. These alternatives are then ranked and a preferred development alternative is identified. The master plan provides a means to ensure that the facilities required to meet the vision for the airport are identified and that space is reserved for the siting of those facilities, if needed. Over three-quarters of respondents to the online survey indicated that their master plan is linked to their strategic plan. The long-term strategies contained in an airport's strategic plan are also reinforced and pro- moted in more detailed land use or environmental plans. For example, the most recent strategic plan for Bradley International Airport states that "[t]he Board has identified `being an excellent neighbor to the Airport's surrounding communities through consistent communication and responsiveness' as a primary supporting element to the Airport's mission."7 In support of this objective, airport management will "[i]nclude, inform and request feedback from surrounding communities regarding future development activities on and off the Airport." Additionally, air- port management will "[a]cquire state-of-the-art noise monitoring equipment, and implement the findings of the FAR Part 150 Study." The strategic planning process is a useful tool for identifying business risks that may need to be further managed or mitigated through implementation of an enterprise risk management plan. In its Strategic Plan 20072011, the Metropolitan Airports Commission (operator of Minneapolis- St. Paul International Airport) identified one of its five most critical issues as the need to address its exposure to the financial risks presented by the rapidly changing economic health of the airlines.8 An action item under this issue is to "develop financial and operational contingency plans." An airport's resource and staffing plan and training and development plan are often indirectly tied to the strategic plan through the business plan. As described above, the business plan should include specific department-level objectives that are based on the strategic plan. By measuring each department's progress toward achieving these objectives, airport management is able to determine the appropriate number of staff needed and their training requirements. An airport's strategic plan may also establish goals that directly affect the airport's human resources plans. For example, the Metropolitan Airports Commission's strategic plan identified one of its 5-year strategies as "match[ing] employee talent with key business needs." Specific ini- tiatives supporting this strategy were to ensure that employee wages and benefits remained com- petitive and to expand employee training programs. The majority (70 percent) of online survey respondents indicated that their training and development plan is linked to their strategic plan. 7 Connecticut Department of Transportation, Bradley International Airport, Strategic Plan 2009, www.bradleyairport.com/docs/ StrategicPlan2009.doc (accessed May 28, 2009). 8 The most recent version of this airport's strategic plan is available online at www.metroairports.org/mac/docs/2009- 2013_Strategic_Plan.pdf (accessed May 28, 2009).